ANIMAL FEED | GEOPOLITICS | COSTS
nnnnCESFAC warns: the Middle East conflict is driving up feed logistics costs and calls for an immediate fuel tax reduction
nnnnSpain’s animal feed industry warns that rising fuel costs and volatility in additive markets such as methionine are already feeding through into the cost structure of feed mills
nnnnThe Spanish Confederation of Manufacturers of Compound Feed for Animals (CESFAC) has issued a formal warning about the consequences the Middle East conflict is generating for the animal feed sector. The rise in oil prices —which have exceeded $100 per barrel following the military escalation between the United States, Israel and Iran that began on 28 February— is feeding through into fuel prices and, with it, into the entire logistical chain for raw materials and feed distribution in Spain.
nnnnnnnnn«Animal feed depends on a highly intensive logistics network. The domestic transport of raw materials and feed is predominantly by road, making it very sensitive to fluctuations in fuel prices.»
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Jorge de Saja, Director General of CESFAC
Fuel, logistics and methionine: three open fronts
nnnnThe primary channel of impact is road transport, which moves virtually all raw materials and finished feed within the country. The increase in diesel prices is passing directly through to import and distribution costs. Although the volume of raw materials destined for animal feed that transits the Strait of Hormuz is limited, and Spanish feed exports do not depend significantly on that route, the real risk lies in the broad-based rise in energy and logistics costs.
nnnnnnnnnThe feed industry is calling for a temporary reduction in the tax burden on fuels and energy in cases of force majeure such as the current Middle East conflict.
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However, CESFAC has identified a second pressure front that directly affects poultry production: methionine. This essential amino acid used in poultry feed formulation is experiencing supply withdrawals, price increases and additional supply costs, driven by international logistical difficulties and rising energy costs at production plants.
nnnn«In times of heightened geopolitical volatility, it would be appropriate to approve mechanisms allowing the temporary reduction or elimination of the tax burden on fuels and energy — measures with immediate effect that can be suspended once they are no longer needed.» — Jorge de Saja, CESFAC
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Methionine: the canary in the coal mine for coming feed cost increases?
nnnnFor the poultry sector, the tension in methionine supply is an early warning signal. This amino acid —whose global production is concentrated in a handful of industrial plants in Asia and Europe— is a critical component in layer and broiler diets. A sustained restriction in its availability would force ration reformulation, compromising feed conversion ratios and productive performance. Add to this the rising cost of transporting feed to farms, and the pressure on poultry producers’ margins could intensify in the coming weeks.
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To all of this must be added the rising cost of transporting day-old chicks from the hatchery, the subsequent transport of broilers to the slaughterhouse, and the distribution of poultry meat. A similar situation will arise for eggs if this surge in fuel costs is sustained.
nnnnCESFAC has requested immediate action from the Government: the temporary reduction or elimination of the tax burden on fuels and energy. This call is in addition to the one already made by CEEES (service station operators), which is asking for VAT to be reduced to 10% and for a rebate of up to 50% on the Special Hydrocarbon Tax. To date, the Government has issued no official response.
To find out more:
-. Official website of CESFAC
-. CESFAC on NeXusAvicultura
-. Animal feed on NeXusAvicultura
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